Citigroup Deal Gives U.S. Government 36% Stake in Company

Citigroup Inc. will get $25 billion after it reached an agreement with the U.S. government Friday that gives the government as much as a 36 percent equity stake in the struggling bank. The U.S. government and other private investors will convert some of their preferred stock in Citi to common shares. Citi will then offer to exchange up to $27.5 billion of its existing preferred stock held by private investors at a conversion price of $3.25 per share.

Citigroup Inc. will get $25 billion after it reached an agreement with the U.S. government Friday that gives the government as much as a 36 percent equity stake in the struggling bank.

It is the third rescue attempt for Citigroup in the past five months. It's contingent on private investors agreeing to a similar swap.

The U.S. government and other private investors will convert some of their preferred stock in Citi to common shares. Citi will then offer to exchange up to $27.5 billion of its existing preferred stock held by private investors at a conversion price of $3.25 per share, a 32 percent premium over Thursday's closing price of $2.46. The government will match up to $25 billion of preferred stock it currently owns for conversion at the same price.
 
Source:  Associated Press,  Citigroup Reaches Aid Deal With Government

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